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Markets tank ahead of budget week

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The stock market erased all of its gains in 2021 as benchmark indices ended the week deep in the red. A number of factors led to this market-wide sell-off. Firstly, pre-budget nervousness engulfed the markets as investors – both retail and institutional – looked to book profits ahead of the budget next week. Foreign Institutional Investors (FIIs) also seemed to have turned bearish as they were net sellers of Indian equities last week. Lastly, global cues remained weak as a sell-off in all major markets gained speed.

Investors and market participants around the country are cautiously going to watch out for the budget that is scheduled for Monday next week. The legacy of having an annual budget for the country has been a long one. Let’s take a look at an interesting fact about it…

Matter of Fact

India’s first budget was introduced in 1860 – while the country was still under British rule. It was presented by a Scottish origin economist called James Wilson. Interestingly, he is also the founder of Standard Chartered Bank and the famous economics journal called The Economist.

India's first budget was presented in 1860 – while the country was under British rule. It was presented by James Wilson. Interestingly, he is also the founder of Standard Chartered Bank and @TheEconomist Click To Tweet

Markets Update

Nifty50

13,634.60

5.13% ▼

Sensex

46,285.77

5.30% ▼

Nifty500

11,302.40

4.66% ▼

Nifty Bank

30,565.50

1.93% ▼

The Big Picture

India’s fiscal deficit widened to a fresh all-time high of ₹11.58 lakh crore in April-December 2020-21.
The Indian economy shrank by 7.5% in Q3 2020 when compared to the same period last year. This was less than the expectations of an 8.8% drop, amid easing of lockdown restrictions from June.
Infrastructure output in India dropped by 1.3% in December of 2020 when compared to the same period last year.
The value of commercial bank deposits and bank loans in India increased by 11.4% and 6.4% respectively year-on-year in the fortnight ended January 15th, 2021.

Investing Insights

How 5G will impact the economy

With the budget taking the centre-stage in the markets this week, we thought it would be good to talk about how the telecom sector is closely watching budget announcements. This years’ budget is expected to promote the 5G ecosystem in the country. It’s only more fitting, because the pandemic has only enforced the essence of an efficient digital economy.

But what is 5G and how does it impact the economy and markets? From 1G to 4G, the improvements were mainly to do with speed. 5G though, is more than just speed. Read more about how 5G will change the world, here.

Ok, so?

Scrappage Policy: Old Cars Die Hard

Experts from the auto sector are of the opinion that the scrappage policy could generate fresh employment and trigger economic growth, and also act as a critical factor to revive the automobile market that has been hit by a prolonged slowdown. Find out the What, Why and How about the scrappage policy and let us know your thoughts about its potential impact on the auto sector. 👇

Ministry of Road Transport & Highways @MORTHIndia has finally approved the vehicle scrappage policy. It'll come into effect on April 1st, 2022. Under the policy, government vehicles older than 15 years will be scrapped.

Okay, so? Find out 👇 pic.twitter.com/7W6c2jMqwK
— smallcase (@smallcaseHQ) January 27, 2021

And that’s a wrap for this week. Stay tuned for exciting budget-week updates 🙂

Abhishek Jadon

VP, Investment Products at Windmill Capital.

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